Arab Petroleum Investments Corporation (APICORP), the Multilateral Development Bank owned by the 10 member nations of the Organisation of Arab Petroleum Exporting Countries (OAPEC), has signed a Documentary Credit Insurance Policy (DCIP) with the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC), a member of the Islamic Development Bank (IDB) Group.
The policy will help APICORP effectively manage risks affecting its Letter of Credit (LC) transactions and LCs of petroleum products exports in ICIEC member countries.
The DCIP is an effective tool to mitigate risk of non-payment arising from a variety of factors. These include insolvency of the buyer/issuing bank; failure or refusal of the issuing bank to provide reimbursement on due date; currency inconvertibility and transfer restrictions imposed by the issuing bank’s country; expropriation, confiscation or government intervention in the business of the issuing bank; and war or civil disturbance in the issuing bank’s country. The DCIP provides insurance coverage to transactions in which a minimum of 30 per cent of the added value in the products transacted comes from ICIEC member states.
Ahmad Bin Hamad Al-Nuaimi, chief executive and general manager of APICORP, said, “We are extremely happy to advance our co-operation with the IDB’s ICIEC by signing the DCIP. Trade finance forms an important focus of our diversification strategy and contributes significantly to our mandate to support Arab energy industry development.
“The DCIP will help us reliably protect and control risks in trade finance transactions, which in turn will help us better support the trading needs of Arab energy companies and enhance our trade-finance business growth. The ICIEC’s extensive geographical remit and its mandate to encourage exports from member countries, some of whom are our own shareholders, make it a highly strategic partner for us. Partnerships like these are key to our ability to expand our trade finance business and create value and growth for energy companies in the region.”
APICORP offers a range of trade finance solutions for import and export transactions designed to meet the challenging needs of energy companies in the Arab world. It has grown its trade finance and structured commodity finance activities rapidly over the past three years complementing its historically strong project finance franchise. Trade and structured commodity finance services and loans provided by APICORP in 2013 helped finance hydrocarbon transactions involving the world’s largest hydrocarbon commodity traders transacting with Arab-based refiners.